* Experts express divergent views over 2018 Budget
* It’s disservice to slash funds for impactful infrastructure in 6 geo-political zones- Fasua
* ’No, lawmakers must take care of grassroots, correct imbalance’
Controversy has continued to trail the assented 2018 Budget by President Muhammadu Buhari. While some economists and financial analysts bemoaned the alterations made by the National Assembly to the Appropriation bill before passing it, others supported the cut by the lawmakers, investigations by The Daily Times revealed.
President Buhari had noted that he was compelled to sign the 2018 Budget into law given the numerous insertions and alterations made in the budget by the National Assembly before passing the bill.
For instance, the lawmakers cut 4,700 projects amounting to N347 billion from what President Buhari presented and introduced 6,403 projects of their own amounting to N578 billion, which was significantly higher than N143 billion injected in the previous budget.
The President, who reluctantly signed the Bill, however, plans to send a supplementary budget to the lawmakers, even though the N9.12 trillion 2018 budget represented an increase of 22.6 per cent, compared to N7.44 trillion of 2017 appropriation.
But in an exclusive response to an enquiry by The Daily Times, President, Institute for Service Excellence and Good Governance, Mr Tope Fasua, said the N9.12 trillion budget is grossly insufficient for nation needs and so the issue of “padding” distracts Nigeria from the need to be budgeting at least N20 trillion.
Fasua said: “I have just returned from a tour of rural areas in Ekiti and I am still in shock at how the leaders of this country have confined millions to a state of barbaric primitivism while they languish themselves in Byzantine opulence. If Angola can budget $56 billion for its 25 million people this year – an equivalent of over N20 trillion, I don’t see why Nigeria should be dancing around N9 trillion or $25 billion.”
He, however, pointed out that the insertion of pork barrel projects as usual, which they call constituency projects, is a further indication of total failure of governance in Nigeria.
“I have been trying to educate Nigerians that we now live in a regime of “the powerful take it all”. Those who have political power simply grab it all. Even when they purportedly do projects for the masses, half of the money disappears into their pockets.
“Nigeria is therefore the global capital of income inequality, poverty and under-achievement. It is not enough for the president to lament about this. The budget process must be totally overhauled”, he explained.
He advised that the nation must devise a means of ensuring it takes undue politics out of our budget and focus keenly on the people.
Fasua said, “Nigerians need urgent rescue. This nation is adrift. Even the budgets for infrastructure are inflated or padded if you like. Infrastructure is where most corruption is lurking so we can’t be deceived. Both the executive and legislators have hands in the demise of this country”.
But giving the breakdown of this year budget, Minister of Budget and National Planning, Senator Udo Udoma said: “We have grown the size of the budget from 4.7 percent in 2015 to 5.9 percent in 2016, 6.7 percent in 2017 and 8 percent in 2018. This is very low compared with South Africa (20.7%) and Ghana (19.2%) as at 2015)”.
The Minister also noted that the ratio of capital spending in total budget increased from 12 per cent in 2015 to 30 per cent in 2016, 32 per cent in 2017 and 32 per cent in 2018.
But he pointed out that highest allocation both capital and current expenditures goes to the Federal Ministry of Power, Works and Housing with N715 billion, while Ministry of Interior got N577 billion, as Defence was allocated N576 billion.
Education got N542 billion; Health – N356 billion. From N520 billion Statutory Transfer, Niger Delta Development Commission (NDDC) got N115.86 billion, National Judicial Council – N110 billion, Universal Basic Education (UBEC) – N109 billion, Independent National Electoral Commission (INEC) got N45.5 billion, National Assembly – N39.5 billion, Public Complaint Commission – N7.48 billion while the National Human Rights Commission received N3.01 billion.
Meanwhile, former Deputy Governor, Central Bank of Nigeria (CBN), Prof Kingsley Moghalu, in a document obtained by The Daily Times, cautioned against the blame game, which he said had delayed the budget for not less than six months.
He said that the blame game between the executive and the legislature smacks of lack of leadership to make the budgetary process efficient and effective in serving the people of Nigeria.
Prof. Moghalu, who is also a presidential aspirant of the Young Progressive Party (YPP), said that the executive should lay the controversy to rest by seeking judicial interpretation of the 1999 Constitution (as amended), on the power of the National Assembly to alter the yearly appropriation bill.
“If the power is legally valid, then effective collaboration between the executive and the legislature on the yearly budgets becomes imperative.
“The Buhari administration has glossed over this judicial solution to, once and for all, solve the perennial problem of “budget padding.” The administration is instead relying on its trusted propaganda machinery, which entails blaming everyone else but itself and leaving Nigerian people unserved or underserved with fiscal policy”, he explained.
He noted that the 2018 budget has seen the continuation with the longer-term dislocation of fiscal policy by the Buhari administration.
“In 2016, Buhari launched a streak of expansionary budgeting, fuelled by excessive debt. From a budget of N4.4 trillion in 2015, the budget rose sharply to N6.06 trillion in 2016, N7.4 trillion in 2017, and N9.12 trillion in 2018.
On signing the latest budget, the President announced his plan for a supplementary budget in 2018. In just three years, the budget has more than doubled.
“However, the two standout outcomes of the expansionary budgets have been economic recession that is followed by sluggish recovery, and unsustainable public debt. In 2016, the economy contracted by 1.5percent (the worst in 25 years) and grew by a meagre 0.8 per cent in 2017.
“Meanwhile, the public debt increased from N12.1 trillion at the end of June 2015 (one month from the inauguration of the Buhari administration) to N22.7 trillion at the end of March, 2018. In less than three years, the public debt had increased by 87.6 per cent.
“At one level, this trend-growth makes the public debt unsustainable. In less than three years, we have utilised perhaps what could be the borrowing limit for a decade.
At another level, the Nigerian national debt today is unsustainable, because we cannot service it through any period of oil revenue shock without a risky and costly debt restructuring as has already begun under Buhari, at a time that oil prices are at a decent level of above $70 a barrel.
“Moreover, the cost of debt service as a ratio of government revenue now hovers around 60 per cent. And not one Kobo of allocation for capital expenditure is any longer covered by government revenue. Capital expenditure allocation is entirely funded by borrowing, even as the country’s debt repayment is also being funded by debt,” he said.
Commenting on the budgetary debacle, Prof. Moghalu said that the Buhari administration had with the 2016 and 2017 budgets spent more than N3 trillion on capital expenditure.
“This is unprecedented in the history of budgeting in Nigeria. The administration flashes this scorecard to Nigerians. But the problem is that infrastructure project delivery in the country in these two fiscal years was underwhelming, without any major improvement in the country’s infrastructure stock,” Moghalu stated.
As for Managing Director of Lagos-based Enterprise Stockbrokers, Rotimi Fakayejo, believes the listed sectors on the Nigerian Stock Exchange (NSE), such as the consumer goods and industrial sectors would benefit most from the implementation of Nigeria’s recently signed 2018 budget.
Fakayejo however said that the consumer goods sector, being a very important sector to all, will be more impacted following the implementation of the budget, adding that it is a sector that most investors would be headed and “we sees transactions remaining northward in the sector”.
The N9.12 trillion appropriation bill signed into law Wednesday, June 20, 2018, comes 7 months after its presentation to a joint session of the National Assembly on November 7, 2017, with
Speaking on the impact of the signed budget to trading at the market generally, Fakayejo said the event, which is an epoch making one is going to create a lot of positive impact, as it will help organisations, industries and companies in better planning with respect to the financial year.
As for experts in the oil and gas industry, some of them who commented on this development, said there was no cause for alarm over the increase in the crude oil benchmark from $45 per barrel to $50.5 per barrel.
The former President of the Society for Petroleum Engineers (SPE), Mr. Saka Matemilola, said the benchmark in the 2018 budget was very sensible at $50.5 per barrel.
According to Metemilola, the benchmark of 50.5 dollars per barrel is very sensible because he does not expect oil price to go below 55 dollars per barrel by the end of the year.
He said irrespective of what happens between China and the United States, oil price will not go below $55 per barrel this year.
“What we should be concerned about is how we can utilise the savings from excess crude price which goes to excess crude account. How do we spend this savings that will impact meaningfully on average Nigerians?
“There is a huge infrastructural gap that needs to be closed. Infrastructure like hospitals, roads and power need to be invested in so that Nigerians can feel the impact of rising crude oil price,” he added.
The Chief Executive Officer of Consistent Energy, Mr Segun Adaju, said, “Naturally, oil price fluctuates and the benchmark price of $50.5/barrel in the 2018 budget is an average for the year 2018.”
According to him, it is certain that oil price may not go below $50.5 per barrel this year, with half of the year gone, adding that there is nothing to be worried about.
The Daily Times recalls that when President Buhari submitted the 2018 Budget proposals to the National Assembly on November 7, 2017, he had hoped that the usual legislative review process would be quick, so as to move Nigeria towards a predictable January-December financial year.
“The importance of this predictability cannot be over-emphasised.
“While the Federal Government’s budget represents less than 10% of aggregate yearly expenditure in the economy, it has a very significant accelerator effect on the financial plans of other tiers of government, and even more importantly, the private sector, which mostly operates on a January-December financial year”, Buhari had said.